ISLAMABAD: Pakistan’s value-added textile exports remained comparatively resilient in the first half of FY26 despite a broader decline in exports and uncertainty in global trade markets, according to the State Bank of Pakistan’s Half Year Report 2025-26.

The report said Pakistan’s overall exports fell 5 percent during H1-FY26, even as global trade expanded. The decline was mainly linked to lower rice exports, falling global commodity prices, increased competition and disruption caused by the closure of the western border.

Despite the slowdown, the textile sector performed better than several other export categories. The SBP said high-value-added textile exports helped cushion the overall fall in export receipts.

Textiles and wearing apparel also supported the recovery in large-scale manufacturing, which grew 4.8 percent during the first half of FY26 after contracting over the previous three years. The central bank linked the improvement partly to higher textile exports and relatively lower US tariffs on selected textile categories.

Pakistan’s broader industrial recovery also helped export-oriented industries. Real GDP growth rose to 3.8 percent during H1-FY26 from 1.9 percent a year earlier, while industrial growth reached 8.1 percent.

The report said improved macroeconomic stability supported production activity. Average inflation fell to 5.2 percent from 7.2 percent a year earlier, while the rupee appreciated by 1.3 percent during the review period. Lower inflation, exchange-rate stability and easing borrowing costs reduced uncertainty for exporters.

Structural risks remain

The SBP warned that Pakistan’s export structure remains vulnerable because of low productivity, policy inconsistency, weak integration into global value chains and limited product and market diversification.

The central bank said Pakistan’s export-to-GDP ratio has continued to decline over the past two decades, making exports more exposed to international price and demand shocks.

The report also pointed to emerging risks from global trade tensions, environmental regulations, higher freight charges, supply-chain disruptions and slower global growth.

The SBP said Pakistan’s textile sector remains heavily concentrated in traditional product categories and needs technological upgrading, value addition and sustainable production practices to remain competitive in global markets.

Despite these challenges, textiles remain central to Pakistan’s industrial and export economy because of their role in manufacturing output, employment and foreign exchange earnings.

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